The CFPB on Wednesday announced a new proposed rule that the bureau says will help small businesses gain access to the credit “they need and deserve” by increasing transparency in the lending marketplace. The bureau is also seeking comments on the proposal.
The rule, mandated by Congress in the Dodd-Frank Act, would, if finalized, require lenders to disclose information about their lending to small businesses, allowing community organizations, researchers, lenders and others to better support small business and community development needs, the CFPB said in a statement.
Under the proposal, lenders would be required to report the following:
- the amount and type of small business credit applied for and extended;
- demographic information about small business credit applicants; and
- key elements of the price of the credit offered.
The CFPB is seeking general comments on the proposal, in addition to specific comments including:
- how to define a small business for purposes of this data collection;
- where to set the activity threshold for when a lender is required to report information;
- how best to collect pricing information for transparency into the cost of small business credit;
- whether and how to collect certain information about the sex of an applicant’s principal owners;
- how to balance the benefits of public disclosure and the risk to privacy interests; and
- the appropriate implementation period.
The comment period will begin 90 days from publication in the Federal Register.
New ‘Tell Your Story’ web portal
Also on Wednesday, the CFPB launched a “Tell Your Story” web portal for small business entrepreneurs to share their stories about applying for credit, which the bureau says will help the CFPB understand small business entrepreneurs’ challenges and successes in accessing credit. It is accompanied by links to educational resources for small business entrepreneurs.